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Weekly Commodities ETF Report: Crude Edges Lower as Markets Cautious on Iran Sanctions, Oversupply Concerns; Gold Logs Modest Gains Following Sharp Sell-Off in Stocks

(MT Newswires) -Crude ended Friday’s session higher, rebounding from losses earlier this week. Traders continue to be cautious ahead of Iran sanctions despite Saudi Arabia reassuring markets on oil supply and recent data showing a sharp build in American crude inventories. Saudi Arabia’s Oil Minister Khalid al-Falih recently said that the kingdom has no intention of an oil embargo on Western consumers, despite the current crisis following allegations that it murdered journalist Jamal Khashoggi. The minister added that Saudi Arabia would work to increase supply. Back home, the Energy Information Administration reported Wednesday that crude oil inventories in the US had a build of 6.3 million barrels in the week to Oct. 19, exceeding analysts’ forecasts by a significant margin. This also compares with the American Petroleum Institute’s report last Tuesday that US commercial crude inventories had risen by 9.88 million barrels for the same week. Following these reports, there has been speculation that the market could well be heading into oversupply in the fourth quarter.  The last bit of data for the week is Baker Hughes’ (BHGE) report late Friday that the number of oil rigs operating in the US rose by two in the week to 875, and that compares with 737 in operation in the same period of 2017. The tally is at the highest levels since early March 2015.

Despite ending Friday with gains and closing the session at $67.59 per barrel, light, sweet crude oil for December delivery had a weekly decline of 2.69%. In other energy futures, gasoline declined during the week, slumping 5.08% lower and settling at $1.81 per gallon on Friday. Meanwhile, natural gas fell 1.43% this week and was down Friday at $3.23 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 0.04% this week, from a decrease of 0.94% in the previous week.

Gold ended the Friday session modestly higher, settling at $1,235.80 and ended the week up 0.46%. Seeking refuge from risk, investors poured into safe havens, driving gold up to its highest level since July and dragging the yield on the 10-year Treasury note down by another 5 basis points to a three-week low. The yellow metal is  benefitting from its safe-haven status after Wall Street suffered its biggest one-day fall since 2011 earlier this week. The sharp sell-off in equities was sparked by concerns over earnings, Italian government finances and escalating trade tensions. Meanwhile, copper ended Friday’s session lower at $2.74, and fell 1.19% for the week  The red metal’s prices continued to trade lower even as its outlook brightened somewhat: according to a Reuters poll, copper prices are on track to rebound by next year, as more robust supply/demand fundamentals are expected to offset macro-economic concerns. The Reuters report cited comments from analyst firm ABN AMRO, which noted that copper prices will see an increase once trade war concerns ease and better Chinese economic figures are reported. And although copper shortages are still possible next year, analysts have lowered forecasts for a global copper deficit to 44,000 tonnes from an earlier estimate of 151,000 tonnes.

Agriculture commodities ended the week mostly lower. Sugar had a weekly decline of 1.15% and settled at a price of $0.14 per pound on Friday; coffee was around $1.20 per pound at Friday’s close, down 1.92% for the week; and cocoa rose 4.12% for the week and closed Friday’s session at $2,251 per tonne.  Among grains, corn was up 0.61% in the week and settled at $3.68 per bushel in Friday’s session; soybeans fell 1.47% for the week, closing at $8.58 per bushel on Friday; and wheat fell 1.75% and settled at $5.05 per bushel at the end of Friday’s session. Wheat saw its greatest weekly decline since early September as expectations for higher wheat exports from Russia pressured US wheat prices. Additionally, the International Grains Council on Thursday raised its forecast for global wheat production after China released improved outlook for its wheat crop. The council now sees wheat production at 728.8 million tonnes, up from a previous forecast of 716.7 million tonnes.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) rose 0.27% for the week, compared with an decline of 1.05% in the prior week.


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